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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. A good for which higher income increases demand
Normal Goods
Relative Prices
Economic Growth
Four-firm concentration ratio
2. Entry of new firms shifts the cost curves for all firms downward
Break-even Point
Monopolistic competition long-run equilibrium
Decreasing Cost industry
Excise Tax
3. The mechanism for combining production resources - with existing technology - into finished goods and services
Free-Rider Problem
Substitute Goods
Production function
Fixed inputs
4. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Shutdown Point
Break-even Point
Price discrimination
Consumer surplus
5. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Absolute Advantage
Determinants of elasticity
Substitution Effect
Marginal Product of Labor (MPL)
6. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Price floor
Unit elastic demand
Average Variable Cost (AVC)
Relative Prices
7. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly
Four-firm concentration ratio
Price elastic demand
Dead Weight Loss
Determinants of Supply
8. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Specialization
Perfect competition
Private goods
Resources
9. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received
Accounting Profit
Complementary Goods
Constrained Utility Maximization
Marginal Cost (MC)
10. Occurs when LRAC is constant over a variety of plant sizes
Total variable costs (TVC)
Price discrimination
Shutdown Point
Constant Returns to Scale
11. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Income Effect
Utility Maximizing Rule
Monopoly long-run equilibrium
Perfectly inelastic
12. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Variable inputs
Marginal Productivity Theory
Constant cost industry
Least-Cost Rule
13. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption
Private goods
Monopolistic competition
Excise Tax
Shortage
14. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Marginal tax rate
Natural Monopoly
Productive Efficiency
Law of Demand
15. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Break-even Point
Specialization
Demand for Labor
Marginal Cost (MC)
16. ATC = TC/Q = AFC + AVC
Normal Goods
Profit Maximizing Resource Employment
Total variable costs (TVC)
Average Total Cost (ATC)
17. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Spillover costs
Surplus
Inferior Goods
Marginal tax rate
18. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Collusive oligopoly
Marginal Analysis
Profit Maximizing Rule
Law of Demand
19. The difference between total revenue and total explicit costs
Private goods
Derived Demand
Comparative Advantage
Accounting Profit
20. Exists at the point where the quantity supplied equals the quantity demanded
Total Product of Labor (TPL)
Market Equilibrium
Non-collusive oligopoly
Excise Tax
21. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Determinants of Demand
Constrained Utility Maximization
Substitution Effect
Increasing Cost Industry
22. A firm that has market power in the factor market (a wage-setter)
Spillover benefits
Monopsonist
Perfectly elastic
Law of Diminishing Marginal Utility
23. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Marginal Cost (MC)
Price Ceiling
Derived Demand
Total variable costs (TVC)
24. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Four-firm concentration ratio
Subsidy
Price Elasticity of Supply
Free-Rider Problem
25. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Total variable costs (TVC)
Monopolistic competition
Cartel
Perfectly competitive long-run equilibrium
26. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.
Unit elastic demand
Total variable costs (TVC)
Constant cost industry
Diseconomies of Scale
27. Entry of new firms shifts the cost curves for all firms upward
Marginal Product of Labor (MPL)
Monopoly long-run equilibrium
Increasing Cost Industry
Cross-Price Elasticity of Demand
28. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run
Monopolistic competition long-run equilibrium
Profit Maximizing Resource Employment
Normal Goods
Shutdown Point
29. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus
Price floor
Constrained Utility Maximization
Determinants of Supply
Fixed inputs
30. AVC = TVC/Q
Average Fixed Cost (AFC)
Law of Increasing Costs
Average Variable Cost (AVC)
Constant cost industry
31. Ei > 1
Luxury
Oligopoly
Monopoly
Resources
32. Es = (%dQs) / (%dPrice)
Average Variable Cost (AVC)
Price Elasticity of Supply
Fixed inputs
Profit Maximizing Resource Employment
33. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good
Marginal tax rate
Spillover benefits
Increasing Cost Industry
Total Revenue
34. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Shutdown Point
Market power
Negative externality
Free-Rider Problem
35. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Marginal Product of Labor (MPL)
Resources
Short run
Inferior Goods
36. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Marginal Product of Labor (MPL)
Diseconomies of Scale
Perfectly competitive long-run equilibrium
Law of Increasing Costs
37. The imbalance between limited productive resources and unlimited human wants
Average Variable Cost (AVC)
Marginal Benefit (MB)
Scarcity
Production function
38. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK
Diseconomies of Scale
Average Product of Labor (APL)
Excess Capacity
Least-Cost Rule
39. Total product divided by labor employed. APL = TPL/L
Free-Rider Problem
Price Elasticity of Supply
Explicit costs
Average Product of Labor (APL)
40. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Marginal Benefit (MB)
Marginal Productivity Theory
Cross-Price Elasticity of Demand
Non-collusive oligopoly
41. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Negative externality
Free-Rider Problem
Determinants of Demand
Opportunity Cost
42. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Excess Capacity
Marginal tax rate
Economics
Price Elasticity of Supply
43. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Variable inputs
Law of Increasing Costs
Producer surplus
Normal Profit
44. The output where ATC is minimized and economic profit is zero
Break-even Point
Economics
Monopolistic competition long-run equilibrium
Perfectly inelastic
45. The total quantity - or total output of a good produced at each quantity of labor employed
Excess Capacity
Total Product of Labor (TPL)
Substitution Effect
Spillover costs
46. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Monopoly
Price inelastic demand
Profit Maximizing Rule
Total variable costs (TVC)
47. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Economic Growth
Subsidy
Monopoly long-run equilibrium
Negative externality
48. A good for which higher income decreases demand
Collusive oligopoly
Inferior Goods
Accounting Profit
Cross-Price Elasticity of Demand
49. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Determinants of elasticity
Price discrimination
Implicit costs
Marginal Resource Cost (MRC)
50. The marginal utility from consumption of more and more of that item falls over time
Law of Diminishing Marginal Utility
Monopolistic competition long-run equilibrium
Price floor
Consumer surplus